In the perfect world, we like to believe that all of us make more than enough money each month to meet all our financial demands and even end up with surplus that can go in our savings. We also like to believe that we have planned for anything and everything that will happen to us and are under no threat of an unexpected financial shortfall, expense, or bills. Unfortunately, we don’t live in the perfect world and sudden unexpected financial demands can occur anytime, turning our whole world upside down.
In the present day America, more than 70% of families live from paycheck to paycheck. Often, the workers get such low salary that it is not enough to make ends meet. This can become quite a problem for them when some unexpected expenditure arises. Of course, friends and family members can help in such situations. But many people are choosing payday loans against all the other options for a variety of reasons.
What are payday loans?
Payday loans are short-term loans that are supposed to be repaid on the borrower’s next payday. The term for most payday loans is 2-4 weeks. They are given against a personal post-dated check that can be cashed by the lender on the set date or repaid using electronic money transfer when a lender withdraws the amount from the borrower’s bank account on the payday.
Payday loans are usually small loans ranging from $100 to $1500. They are unsecured loans and do not require any credit checks. This is why lending companies/individuals charge a lot in interest rates. However, due to their convenience and easiness of obtaining, they are gaining popularity day by day.
Apart from being a common source for emergency fund, there are many more reasons why pay day loans can come in handy. Read on to find out why they are in such high demand:
With payday loans, funds can be released the same day or within 24 hours. There is no requirement of filling lengthy applications and waiting in queue for your turn. This is one of the main reason payday loans are appealing to borrowers since they don’t have to get into lengthy contracts when they are only in need of a quick cash boost and are unable to wait even a fortnight.
No credit card facilities:
Hard to believe, but even in today’s economic times – many stores don’t accept credit cards and prefer cash only. Sometimes, the amount you require is greater than the limit on your credit card. Payday loans come in handy at such situations when using credit card is not an option.
No requirement for a credit score:
Unlike traditional ways of loan that require the borrowers to show their credit rating, a payday loan has no such requirements. If you have a bad credit score due to any reason whatsoever, you can still apply for a payday loan. Same goes for people who haven’t yet established their credit rating yet. They can still request for a payday loan and receive cash instantly.
Bills that come before pay:
Many times we receive bills for various expenses before we are paid for the month. To cover all the different bills that fall due at different times of the month, pay day loans can be taken out to take care of all the bills that are required to be paid immediately.
Good credit profile:
We all know that paying bills especially credit card bills can negatively impact our credit score. These late payments stay in a person’s credit profile for more than 5 years. If you have a minimum due balance to pay on your credit card and are short of a line of credit that you can use to pay the amount, then a payday loan is a good option. It will help pay off the balance on your credit card, keep it current and help you to maintain a good credit rating.
A convenient alternative to traditional loans:
We all know that in order to get the best interest rates on personal loans, we should take out a large loan. The smaller the loan is, the greater the interest rate will be. Of course, the interest rates are low than a pay day loan but in the long run, personal loans can cost you more money than you actually owed. When in need of immediate cash, pay day loan can serve to be a great alternative to traditional loans.
Great option for youngsters:
Payday loans are a great option for youngsters who are just learning how to balance their savings and expenses. Many times, the young earners might not have enough cash to meet the expenses from one paycheck to other which might lead them to ask their family members or friends for a loan. However, with payday loans the youngsters don’t have to take money from anyone and can take instant cash anytime they want to.
High interest loans are a concern for many borrowers who want to take out loans through the payday platform. However, many states have laws in place that protect the borrowers from extremely high interest rates and fees. Some states also have rules that restrict the lenders from charging an interest rate above a certain percentage. Before going for a payday loan and the interest rates that accompany it, check the laws of your state.
Available all the time:
At the time recession hits, many banks and lenders don’t take the risk of giving out loans even to people with good credit. However, payday loans can come to their rescue and are available for them anytime, anywhere. Banks can abandon a borrower but payday loans can be taken out at the time of our crucial needs.
Never miss out on the good things in life:
We often see something in shops that we really wish to buy if we had the money. Sometimes these items are on limited time sale and the sale is ending before the day your salary comes. Or maybe a friend is having a baby shower and you don’t have much money left for a gift. These things might not be essential part of our lives but they are important things that you might not want to miss out on. With a small payday loan you can avail the things that you might not want to delay or postpone out of your life.
Can be used for anything:
Payday loans come with no restrictions. This means that the money you receive from the loan can be used for anything that you wish for. Whether you use it for an emergency, household expense or to indulge in any luxury – the choice is yours.
There are many benefits of getting a payday loan. And when there’s demand – there’s supply. Due to the gaining popularity of payday borrowers, lending institutes have appeared all over the country. The business branch is the largest in the financial sector. And with the emergence of internet, the infrastructure has spread even wider with many online companies offering payday loans through the internet. These companies are secured and allow the borrowers to take out the required cash without leaving their home and going to any brick and mortar location.
A note to remember: As good as they may seem it is always important to take caution when going for a payday loan. The world is full of scammers so make sure to check the company you plan to borrow from. Make sure they are trustworthy before taking any loan from them.
For those who want to avoid late fees or don’t want to hurt their credit score – payday loans are a good option. The companies that offer payday loans can provide you with fast and easy cash to deal with any emergency or desire that come up in your life.